See how you can maximise your property taxes come June 30.
When it comes to tax time, there are a bunch of property taxes homeowners are required to pay. Whether the property is your primary place of residence or an investment property makes a big difference in what you need to pay.
It’s wise to have a tax minimisation strategy in place, however this strategy is going to depend on whether or not you live in the house as different taxes apply to investment properties such as ‘land tax’. Come June 30, here’s everything you need to know about property taxes in Australia.
A home in which you are the owner/occupant
Many people think because your primary residence doesn’t generate income, there aren’t many expenses that can be added to your tax deductions. However, depending on your circumstances there can often be a range of deductions that can be used to save you some serious cash.
Home office
If you work from home and have a dedicated home office there are a range of deductions you could take advantage of relating to:
- Work related internet
- Work related phone
- Costs incurred with maintenance to your home office
- Home insurance
- Depreciation of office equipment
- Utilities
- Rent or mortgage
If you are working from home but don’t have a dedicated home office and instead work from your kitchen or dining room table, you are entitled to some deductions including:
- Depreciation of office equipment
- Work related phone
- Work related internet
If you have a dedicated home office but work between the office and home then there are still some deductions you can take advantage of including:
- Work related phone
- Work related internet
- Costs associated with maintainin your home office
- Utilities
- Depreciation of office equipment
READ MORE: How to know when you should rent or buy
Renting a room
Expenses because of rental income from a room in your home can also be deducted. Home owners can also deduct expenses from shared living areas within a ‘reasonable figure’ (usually 50% of floor space) including:
- Advertising costs to attract tenants
- Depreciation
- Repairs and maintenance
- Insurance
- Bank charges
- Corporate fees
- Mortgage interest
An investment property
The Australian Tax Office (ATO) offers a number of concessions to investment property owners. Owning an investment property can be very beneficial come tax time if you know how to properly leverage your deductions to minimise tax.
Rental expenses
As mentioned previously, there are a range of deductibles you can make against expenses incurred in renting as well as offering your property for rent.
Depreciation
Depreciation can be deducted against your tax on an ongoing basis and not only includes the overall property value, but contents as well such as appliances and furniture.
READ MORE: How negative gearing benefits investors
Land and council taxes
Land tax is an annual tax charged to all homeowners. If the property is not your primary place of residence and is an investment property, then the land tax along with relevant council taxes are fully deductible.
Insurance
Any insurance related to your investment property is tax deductible. This includes landlords, rental, property and home and contents insurance.
Repairs and maintenance
Any repairs needed to the original state of your property as well as the maintenance needed to prevent depreciation can all be deducted.
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